It is a parallel that is seducing Wall Street bankers and investors: 2011 as a repeat of 2008, the history of financial turmoil playing in one endless loop.

As a big fund manager muttered darkly this past weekend while heading into the office to prepare for a tumultuous Monday, "The sense of déjà vu is almost sickening."

Those who think of 2011 as "2008—The Sequel" now have their very own "Lehman moment." Just substitute Friday's historic downgrade of the U.S. credit rating by Standard & Poor's for the collapse of the investment bank in September 2008, et voilà, you have a carbon copy of an event that made the unthinkable happen and spooked markets around the globe.

They got the last part right. Investors looked decidedly spooked on Monday with Asian and European bourses down sharply and the Dow tumbling 643.76 points, or more than 5%.

But market turbulence alone isn't enough to prove that history repeats itself.

To borrow a phrase often used to rationalize investment bubbles, this time is different, and the bankers, investors and corporate executives who look at today's problems through the prism of 2008 risk misjudging the issues confronting the global economy.

There are three fundamental differences:

between the financial crisis of three years ago and today's events.

1.Starting from the most obvious: The two crises had completely different origins.

The older one spread from the bottom up. It began among over-optimistic home buyers, rose through the Wall Street securitization machine, with more than a little help from credit-rating firms, and ended up infecting the global economy. It was the financial sector's breakdown that caused the recession.

The current predicament, by contrast, is a top-down affair. Governments around the world, unable to stimulate their economies and get their houses in order, have gradually lost the trust of the business and financial communities.

That, in turn, has caused a sharp reduction in private sector spending and investing, causing a vicious circle that leads to high unemployment and sluggish growth. Markets and banks, in this case, are victims, not perpetrators.

2.The second difference is perhaps the most important: Financial companies and households had feasted on cheap credit in the run-up to 2007-2008.

When the bubble burst, the resulting crash diet of deleveraging caused a massive recessionary shock.

This time around, the problem is the opposite. The economic doldrums are prompting companies and individuals to stash their cash away and steer clear of debt, resulting in anemic consumption and investment growth.

3.The final distinction is a direct consequence of the first two.

Given its genesis, the 2008 financial catastrophe had a simple, if painful, solution: Governments had to step in to provide liquidity in droves through low interest rates, bank bailouts and injections of cash into the economy.

A Federal Reserve official at the time called it "shock and awe." Another summed it up thus: "We will backstop everything."

The policy didn't come cheap as governments world-wide poured around $1 trillion into the system. Nor was it fair to the tax-paying citizens who had to pick up the tab for other people's sins. But it eventually succeeded in avoiding a global Depression.

Today, such a response isn't on the menu. The present strains aren't caused by a lack of liquidity—U.S. companies, for one, are sitting on record cash piles—or too much leverage. Both corporate and personal balance sheets are no longer bloated with debt.

The real issue is a chronic lack of confidence by financial actors in one another and their governments' ability to kick-start economic growth.

If you need any proof of that, just look at the problems in the "plumbing" of the financial system—from the "repo" market to interbank lending—or ask S&P or buyers of Italian and Spanish bonds, how confident they are that politicians will sort out this mess.

The peculiar nature of this crisis means that reaching for the weapons used in the last one just won't work.

Consider Wall Street's current clamor for intervention by the monetary authorities—be it in the form of more liquidity injections (or "QE3") by the Fed or the European Central Bank.

So 2008.

Even if the central banks were inclined that way, pumping more money into an economy already flush with cash would provide little solace.

These days, large companies are frowning all the way to the bank, depositing excess funds in safe-but-idle accounts, as shown by Bank of New York's unprecedented move last week to charge companies to park their cash in its vaults.

As for jittery investors, a few more billions minted by Uncle Sam or his Frankfurt cousin are unlikely to be enough to persuade them to jump back into the market.

In 2011, the financial world can't go cap in hand to the political capitals, hoping for a handout. To get out of the current impasse, markets will have to rely on their inner strength or wait for politicians to take radical measures to spur economic growth.

A market-led solution isn't impossible. At some point prices of assets will become so cheap that they will reawaken the "animal spirits" of both investors and companies.

As Warren Buffett once wrote to his shareholders, "we have usually made our best purchases when apprehensions about some macro event were at a peak".

The alternative is to hope that politicians in the U.S and Europe will introduce the fiscal and labor reforms needed to reawaken demand and investment growth. But that is bound to take time.

As often, the past looks a lot simpler than the present. But the reality is that, unlike 2008, governments' money is no good in today's stressed environment.

As large and complex as a global economy is it is not possible to identify one perfect cause to the current financial trends, either nationally or internationally. This very fact is what makes it difficult to discuss, much less to identify, a solution that will clearly turn it around.

One fact that most seem to agree upon is that there

1.was too much liquidity,

2.that is too much debt,

3.and that the risks of carrying this debt into the future finally overwhelmed the financial system.

Beyond that there is just too much chaos and confusion to identify a true cause and solution, and therefore we are all left to address our fears and anger while waiting for the system to correct itself and hoping that whatever is being done to fix the situation doesn't just make it worse.

Half a life time ago the collected wisdom of the advanced economies determined that adopting policies geared toward a globalization of the economy was in everyone's best interest, as if it could actually be avoided.

The reasons were clear and obvious then and now; growth, growth, and more growth was the only way to secure the health and welfare of both the local national populations and the populations of the lagging economies which, we were sure, would eventually come around to an understanding that capitalism and democracy was the only hope for long lasting peace and health across the globe. This was not wrong,even if we got most of the details wrong.

Now many years later we are deep within a transitional process and have been caught off guard by the forces that have been unleashed. Though many of us thought we understood well enough how economies functioned to mitigate and moderate any negative influences while harnessing the awesome power of capital to build a better world still no one could actually agree on how that worked.

Indeed, for many the best answer was to work to promote an economy free of all guides, guards, and unnatural or artificial influences.

That is still the call of a large percentage of the population, that is to let the chips fall where they may and any hardships must certainly be well earned by those experiencing them.

And in this mix was a well encrusted old guard of national economists and policy setters who believed they were still operating within an economy like that which existed a generation ago, just bigger and faster, and any signals that there was a large shifting of global economic forces underway was just credited as a successful conclusion to the globalization efforts of the past 30 years.

Of course no one actually wanted to wrestle with the conclusions to be drawn by the fact that easy capital movement and cheap debt was being used to secure growth across all sectors on a global level.

·One nation deflates it’s currency to make it’s good cheaper to another nations population,

·another nation guarantees loans on a national level to a nation so that money in that nation remains cheaply available for use in purchasing the goods and services it’s businesses provide,

·other nations acquiring vast wealth by selling goods and services that they cannot use but that others can at far cheaper prices then turn this overflow of wealth around as loans to the buying countries in order to keep their own factories running at full capacity. And so the cycle grew.

This, plus the trust that the world was headed in the right direction, that the economy was robust enough and, if left to itself, able to adjust to any situation while still leaving enough on the table to allow everyone to get what they need while letting others take as much as they can led to the crisis of 2008.

The rest is just the details, but as they say, the nightmare is always in the details.